EX-2 3 d809298dex2.htm EX-2

EX-2

Exhibit 2

2014
THIRD QUARTER RESULTS
Stock Listing Information
Colombian Stock Exchange S.A.
Ticker: CLH
Investor Relations
Patricio Treviño Garza
+57 (1) 603-9823
E-mail: patricio.trevinog@cemex.com

2014 Third Quarter Results Page 2 OPERATING AND FINANCIAL HIGHLIGHTS Consolidated cement volume (thousand of metric tons) Consolidated domestic gray cement volume (thousand of metric tons) Consolidated ready-mix volume (thousand of cubic meters) Consolidated aggregates volume (thousand of metric tons) Net sales Gross profit
Gross profit margin
Operating earnings before other expenses, net
Operating earnings before other expenses, net, margin
Controlling interest net income
Operating EBITDA
Operating EBITDA margin
Free cash flow after maintenance capital expenditures
Free cash flow
Net debt
Total debt
Earnings per share
Shares outstanding at end of period
Employees
January – September Third Quarter
2014
2013
% Var.
2014
2013
% Var.
5,986 5,536 8% 2,055 1,915 7%
5,327 4,994 7% 1,827 1,737 5%
2,624 2,443 7% 954 908 5%
6,499 5,456 19% 2,354 2,079 13%
1,324 1,288 3% 460 474(3%)
656 668(2%) 236 238(1%)
49.5% 51.8% (2.3pp) 51.3% 50.2% 1.1pp
372 405(8%) 136 145(6%)
28.1% 31.5% (3.4pp) 29.6% 30.6% (1.0pp)
209 238 (12%) 88 96 (9%)
443 474 (7%) 160 168 (5%)
33.4% 36.8% (3.4pp) 34.7% 35.5% (0.8pp)
253 232 9% 111 91 22%
213 201 6% 83 76 8%
1,088 1,345 (19%) 1,088 1,345 (19%)
1,142 1,424 (20%) 1,142 1,424 (20%)
0.38 0.43 (12%) 0.16 0.17 (9%)
556 556 0% 556 556 0%
4,877 4,106 19% 4,877 4,106 19%
In millions of US dollars, except percentages, employees, and per-share amounts. Shares outstanding at the end of period are presented in millions. Consolidated net sales during the third quarter of 2014 declined by 3% compared to the third quarter of 2013. Adjusting for the effect of lower revenue from our housing solutions projects this year, consolidated net sales increased by 6% during the third quarter of 2014, compared to the same period in 2013. Cost of sales as a percentage of net sales declined by 1.1pp from 49.8% to 48.7% during the third quarter of 2014 compared to last year. Operating expenses as a percentage of net sales during the third quarter increased by 2.1pp from 19.6% to 21.7% compared to the same period in 2013.
Operating EBITDA during the third quarter reached US$160 million, declining by 5% compared to the third quarter of 2013. This decline is mainly explained by the effect of one scheduled maintenance work in Colombia, lower prices of our products and a lower EBITDA contribution from our housing solutions projects this year. Operating EBITDA margin during the third quarter of 2014 declined by 0.8pp, compared to the third quarter of 2013. Controlling interest net income during the third quarter of 2014 reached US$88 million, declining by 9% compared to the third quarter of 2013. Total debt at the end of the third quarter of 2014 reached US$1,142 million. Please refer to definition of terms and disclosure for presentation of financial and operating information.

OPERATING RESULTS
Colombia
January – September Third Quarter
2014 2013 % Var. 2014 2013 % Var.
Net sales 769 735 5% 267 287 (7%)
Operating EBITDA 281 305 (8%) 100 115 (13%)
Operating EBITDA margin 36.5% 41.5% (5.0pp) 37.5% 40.0% (2.5pp)
In millions of US dollars, except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January – September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014
Volume 18% 14% 14% 8% 24% 12%
Price (USD) (7%) (8%) (3%) (1%) (4%) (3%)
Price (local currency) (3%) (6%) 1% (0%) (1%) (1%)
In Colombia, during the third quarter our domestic gray cement, ready-mix and aggregates volumes increased by 14%, 8% and 12%, respectively, compared to the third quarter of 2013. For the first nine months of 2014, our domestic gray cement, ready-mix and aggregates volumes increased by 18%, 14% and 24%, respectively, compared to the same period in 2013.
Construction activity in the third quarter was driven by a positive performance in all demand segments. The residential sector continued its positive trend. Infrastructure remained also an important driver for demand of our products with the execution of several ongoing projects that were awarded in past years.
Panama
January – September Third Quarter
2014 2013 % Var. 2014 2013 % Var.
Net sales 241 238 2% 93 84 10%
Operating EBITDA 108 114 (5%) 42 40 7%
Operating EBITDA margin 44.9% 47.9% (3.0pp) 45.7% 47.1% (1.4pp)
In millions of US dollars, except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January – September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014
Volume (14%) (6%) (4%) 4% (1%) 7%
Price (USD) 12% 11% (0%) (1%) (2%) (2%)
Price (local currency) 12% 11% (0%) (1%) (2%) (2%)
In Panama during the third quarter our domestic gray cement declined by 6% while our ready-mix and aggregates volumes increased by 4% and 7% respectively, compared to the third quarter of 2013. For the first nine months of 2014, our domestic gray cement, ready-mix and aggregates volumes declined by 14%,4% and 1%, respectively, compared to the same period in 2013.
The decline in our cement volumes during the quarter, on a year over year basis, was attributed to lower consumption from the Panama Canal expansion project. The residential sector remained the main driver for demand, along with several ongoing infrastructure projects like Corredor Norte.
Please refer to definition of terms and disclosure for presentation of financial and operating information.
2014 Third Quarter Results
Page 3

OPERATING RESULTS
Costa Rica
January – September Third Quarter
2014 2013 % Var. 2014 2013 % Var.
Net sales 114 117 (3%) 38 40 (6%)
Operating EBITDA 51 52 (1%) 18 17 2%
Operating EBITDA margin 44.9% 44.3% 0.6pp 47.1% 43.1% 4.0pp
In millions of US dollars, except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January –September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014
Volume 1% (10%) (24%) (32%) (0%) 7%
Price (USD) (3%) (2%) (4%) (6%) (11%) (10%)
Price (local currency) 5% 5% 4% 1% (3%) (4%)
In Costa Rica, our domestic gray cement and ready mix volumes in the third quarter of 2014 declined by 10% and by 32%, respectively, while our aggregates volumes increased by 7%, compared to the third quarter of 2013. For the first nine months of 2014, our cement volumes increased by 1%, while our ready-mix volumes decreased by 24% and our aggregates volumes remained stable, on a year-over-year basis.
Construction activity in Costa Rica slowed down during the quarter, due to delays in the start of new projects. Ongoing infrastructure projects, like the Cañas-Liberia highway, remained the main driver of demand during the third quarter.
Rest of CLH
January – September Third Quarter
2014 2013 % Var. 2014 2013 % Var.
Net sales 210 211 (0%) 67 65 2%
Operating EBITDA 60 59 1% 20 18 9%
Operating EBITDA margin 28.6% 28.1% 0.5pp 29.8% 28.0% 1.8pp
In millions of US dollars, except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January – September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014 January – September
2014 Third Quarter
2014
Volume (0%) (2%) (0%) 6% 57% 81%
Price (USD) (2%) 2% 5% 9% (9%) (3%)
Price (local currency) 1% 3% 7% 11% (4%) 2%
In the Rest of CLH region, which includes our operations in Nicaragua, Guatemala, El Salvador and Brazil, during the third quarter of 2014 our domestic gray cement decreased by 2%, while our ready-mix and aggregates volumes increased by 6% and 81%, compared to the third quarter of 2013. For the first nine months of 2014, our cement and ready-mix volumes remained flat, while our aggregates volumes increased by 57%, compared to the same period in 2013.
Ongoing infrastructure projects like the Izapa-Nejapa highway, along with the housing sector, remained the main drivers for demand of our products.
Please refer to definition of terms and disclosure for presentation of financial and operating information.
2014 Third Quarter Results
Page 4

OPERATING EBITDA, FREE CASH FLOW AND DEBT RELATED INFORMATION
Operating EBITDA and free cash flow
January – September Third Quarter
2014 2013 % Var 2014 2013 % Var
Operating earnings before other expenses, net 372 405 (8%) 136 145 (6%)
+ Depreciation and operating amortization 71 69 23 23
Operating EBITDA 443 474 (7%) 160 168 (5%)
- Net financial expense 75 87 28 28
- Capital expenditures for maintenance 38 22 12 14
- Change in working capital (3) 43 (13) 13
- Taxes paid 81 85 22 20
- Other cash items (net) (0) 5 0 2
Free cash flow after maintenance capital expenditures 253 232 9% 111 91 22%
- Strategic capital expenditures 40 31 28 15
Free cash flow 213 201 6% 83 76 8%
In millions of US dollars.
The free cash flow generated during the quarter was used to reduce debt.
Information on Debt
Third Quarter Second Third Quarter
Quarter
2014 2013 % Var 2014 2014 2013
Total debt (1)(2) 1,142 1,424(20%) 1,237 Currency denomination
Short- term 22% 12% 21% US dollar 98% 96%
Long -term 78% 88% 79% Colombian peso 2% 4%
Cash and cash equivalents 54 79 (32%) 59 Interest rate
Net debt 1,088 1,345 (19%) 1,178 Fixed 78% 82%
Variable 22% 18%

In millions of US dollars, except percentages.
(1) Includes capital leases, in accordance with International Financial Reporting Standards (IFRS).
(2) Represents the consolidated balances of CLH and subsidiaries.
Please refer to definition of terms and disclosure for presentation of financial information.
2014 Third Quarter Results Page 5

OPERATING RESULTS
Income statement & balance sheet
CEMEX Latam Holdings, S.A. and Subsidiaries
(Thousands of U.S. Dollars, except per share amounts)
January – September Third Quarter
INCOME STATEMENT 2014
2013
% Var.
2014
2013
% Var.
Net Sales 1,324,298 1,287,765 3% 460,343 473,774 (3%)
Cost of Sales (668,296) (620,230) (8%) (224,145) (235,910) 5%
Gross Profit 656,003 667,535 (2%) 236,198 237,864 (1%)
Operating Expenses (284,088) (262,110) (8%) (99,865) (92,749) (8%)
Operating Earnings Before Other Expenses, Net 371,914 405,425 (8%) 136,333 145,115 (6%)
Other expenses, Net (3,863) (4,674) 17% (4,382) (1,359) (222%)
Operating Earnings 368,051 400,751 (8%) 131,951 143,756 (8%)
Financial Expenses (75,220) (86,786) 13% (27,595) (27,996) 1%
Other Income (Expenses), Net 5,564 (4,909) N/A 9,870 (147) N/A
Net Income Before Income Taxes 298,395 309,056 (3%) 114,226 115,613 (1%)
Income Tax (88,592) (70,487) (26%) (25,975) (18,895) (37%)
Consolidated Net Income 209,803 238,569 (12%) 88,251 96,718 (9%)
Non-controlling Interest Net Income (850) (887) 4% (458) (419) (9%)
CONTROLLING INTEREST NET INCOME 208,953 237,682 (12%) 87,793 96,299 (9%)
Operating EBITDA 442,836 474,413 (7%) 159,766 168,020 (5%)
Earnings per share 0.38 0.43 (12%) 0.16 0.17 (9%)
As of September 30 As of September 30
BALANCE SHEET 2014 2013
Total Assets 3,751,678 3,980,631
Cash and Temporary Investments 53,870 78,996
Trade Accounts Receivables 168,361 124,965
Other Receivables 107,901 146,557
Inventories 107,516 92,501
Other Current Assets 21,375 25,244
Current Assets 459,022 468,263
Fixed Assets 1,183,659 1,194,790
Other Assets 2,108,997 2,317,578
Total Liabilities 2,276,070 2,554,691
Current Liabilities 689,167 584,424
Long-Term Liabilities 1,573,820 1,958,706
Other Liabilities 13,083 11,561
Consolidated Stockholders’ Equity 1,475,608 1,425,940
Non-controlling Interest 6,256 6,006
Stockholders’ Equity Attributable to Controlling Interest 1,469,353 1,419,934
Please refer to definition of terms and disclosure for presentation of financial information.
2014 Third Quarter Results Page 6

OPERATING RESULTS
Income statement & balance sheet
CEMEX Latam Holdings, S.A. and Subsidiaries
(Millions of Colombian Pesos in nominal terms, except per share amounts)
January – September Third Quarter
INCOME STATEMENT 2014
2013
% Var. 2014
2013
% Var.
Net Sales 2,584,581 2,405,479 7% 892,992 906,552 (1%)
Cost of Sales(1,304,287)(1,158,558)(13%)(434,805) (451,407) 4%
Gross Profit 1,280,295 1,246,921 3% 458,186 455,145 1%
Operating Expenses, net(554,444)(489,608)(13%)(193,722) (177,472) (9%)
Operating Earnings Before Other Expenses, Net 725,851 757,313(4%) 264,464 277,673 (5%)
Other Expenses, Net(7,540)(8,731) 14% (8,500) (2,600) (227%)
Operating Earnings 718,311 748,582(4%) 255,964 275,073 (7%)
Financial Expenses(146,804)(162,112) 9%(53,530)(53,570) 0%
Other Income (Expenses) Financial, net 10,859(9,170) N/A 19,146(281) N/A
Net Income Before Income Taxes 582,366 577,300 1% 221,580 221,222 0%
Income Tax(172,901) (131,666) (31%) (50,387) (36,155) (39%)
Consolidated Net Income 409,465 445,634(8%) 171,193 185,067(7%)
Non-controlling Interest Net Income(1,658)(1,657)(0%)(888)(802)(11%)
CONTROLLING INTEREST NET INCOME 407,806 443,977(8%) 170,304 184,265(8%)
Operating EBITDA 864,267 886,180(2%) 309,911 321,502(4%)
Earnings per share 736.37 798.44(8%) 306.27 331.38(8%)
As of September 30 As of September 30
BALANCE SHEET 2014 2013
Total Assets 7,610,204 7,621,515
Cash and Temporary Investments 109,274 151,250
Trade Accounts Receivables 341,518 239,264
Other Receivables 218,874 280,605
Inventories 218,093 177,107
Other Current Assets 43,359 48,333
Current Assets 931,118 896,559
Fixed Assets 2,401,028 2,287,605
Other Assets 4,278,058 4,437,351
Total Liabilities 4,616,962 4,891,338
Current Liabilities 1,397,961 1,118,967
Long-Term Liabilities 3,192,463 3,750,236
Other Liabilities 26,538 22,135
Consolidated Stockholders’ Equity 2,993,242 2,730,177
Non-controlling Interest 12,689 11,500
Stockholders’ Equity Attributable to Controlling Interest 2,980,553 2,718,677
Please refer to definition of terms and disclosure for presentation of financial information.
2014 Third Quarter Results Page 7

OPERATING RESULTS
Operating Summary per Country
In thousands of U.S. dollars. EBITDA margin as a percentage of net sales.
January – September Third Quarter
NET SALES 2014
2013
% Var. 2014
2013
% Var.
Colombia 768,629 734,669 5% 266,692 287,326 (7%)
Panama 241,262 237,654 2% 92,577 84,095 10%
Costa Rica 113,729 117,241 (3%) 37,733 40,193 (6%)
Rest of CLH 210,157 210,588 (0%) 66,930 65,491 2%
Others and intercompany eliminations (9,478) (12,387) 23% (3,588) (3,331) (8%)
TOTAL 1,324,298 1,287,765 3% 460,343 473,774 (3%)
GROSS PROFIT
Colombia 385,990 399,365 (3%) 133,594 148,549 (10%)
Panama 118,353 124,718 (5%) 46,912 43,698 7%
Costa Rica 61,561 63,534 (3%) 21,210 21,462 (1%)
Rest of CLH 75,769 73,799 3% 25,552 23,470 9%
Others and intercompany eliminations 14,329 6,119 134% 8,931 685 1204%
TOTAL 656,003 667,535 (2%) 236,198 237,864 (1%)
OPERATING EARNINGS BEFORE OTHER EXPENSES, NET
Colombia 253,865 281,062 (10%) 90,660 106,924 (15%)
Panama 95,471 100,649 (5%) 38,035 35,206 8%
Costa Rica 45,857 46,217 (1%) 15,989 15,423 4%
Rest of CLH 56,206 55,441 1% 18,767 17,150 9%
Others and intercompany eliminations (79,485) (77,944) (2%) (27,117) (29,588) 8%
TOTAL 371,914 405,425 (8%) 136,333 145,115 (6%)
OPERATING EBITDA
Colombia 280,678 304,683(8%) 99,886 114,812 (13%)
Panama 108,343 113,930(5%) 42,331 39,615 7%
Costa Rica 51,121 51,899(1%) 17,755 17,328 2%
Rest of CLH 60,009 59,124 1% 19,954 18,364 9%
Others and intercompany eliminations (57,314) (55,223) (4%) (20,160) (22,099) 9%
TOTAL 442,836 474,413(7%) 159,766 168,020 (5%)
OPERATING EBITDA MARGIN
Colombia 36.5% 41.5% 37.5% 40.0%
Panama 44.9% 47.9% 45.7% 47.1%
Costa Rica 44.9% 44.3% 47.1% 43.1%
Rest of CLH 28.6% 28.1% 29.8% 28.0%
TOTAL 33.4% 36.8% 34.7% 35.5%
Please refer to definition of terms and disclosure for presentation of financial information.
2014 Third Quarter Results Page 8

OPERATING RESULTS
Volume Summary
CLH volume summary
Cement and aggregates: Thousands of metric tons.
Ready-mix: Thousands of cubic meters.
January – September Third Quarter
2014 2013% Var. 2014 2013 % Var.
Total cement volume 1 5,986 5,536 8% 2,055 1,915 7%
Total domestic gray cement volume 5,327 4,994 7% 1,827 1,737 5%
Total ready-mix volume 2,624 2,443 7% 954 908 5%
Total aggregates volume 6,499 5,456 19% 2,354 2,079 13%
Per-country volume summary
January—September Third Quarter Third Quarter 2014 Vs.
DOMESTIC GRAY CEMENT VOLUME 2014 Vs. 2013 2014 Vs. 2013 Second Quarter 2014
Colombia 18% 14% 6%
Panama(14%)
1% (6%)
(10%) 21%
(9%)
Costa Rica
Rest of CLH(0%) (2%) (10%)
READY-MIX VOLUME
Colombia 14% 8% 8%
Panama(4%)
(24%) 4%
(32%) 40%
(11%)
Costa Rica
Rest of CLH(0%) 6% 9%
AGGREGATES VOLUME
Colombia 24% 12% 6%
Panama(1%) 7% 25%
Costa Rica(0%)
57% 7%
81% 12%
(13%)
Rest of CLH
1 Consolidated cement volume includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker.
Please refer to definition of terms and disclosure for presentation of operating results.
2014 Third Quarter Results Page 9

OPERATING RESULTS
Price Summary
Variation in U.S. Dollars
January - September Third Quarter Third Quarter 2014 Vs.
DOMESTIC GRAY CEMENT PRICE 2014 Vs. 2013 2014 Vs. 2013 Second Quarter 2014
Colombia(7%)(8%)(5%)
Panama 12% 11% 0%
Costa Rica(3%)(2%) 3%
Rest of CLH (*)(2%) 2% 1%
READY-MIX PRICE
Colombia(3%)(1%)(2%)
Panama(0%)
(4%)(1%)
(6%) 2%
3%
Costa Rica
Rest of CLH (*) 5% 9% 2%
AGGREGATES PRICE
Colombia(4%)(3%)(4%)
Panama(2%)(2%) 2%
Costa Rica(11%)(10%)(1%)
Rest of CLH (*)(9%)(3%) 5%
Variation in Local Currency
January - September Third Quarter Third Quarter 2014 Vs.
DOMESTIC GRAY CEMENT PRICE 2014 Vs. 2013 2014 Vs. 2013 Second Quarter 2014
Colombia(3%)(6%)(3%)
Panama 12%
5% 11%
5% 0%
1%
Costa Rica
Rest of CLH (*) 1% 3%(0%)
READY-MIX PRICE
Colombia 1%(0%)(1%)
Panama(0%)(1%) 2%
Costa Rica 4% 1% 1%
Rest of CLH (*) 7% 11% 2%
AGGREGATES PRICE
Colombia(1%)(1%)(3%)
Panama(2%)
(3%)(2%)
(4%) 2%
(2%)
Costa Rica
Rest of CLH (*)(4%) 2% 7%
(*) Volume weighted-average price.
Please refer to definition of terms and disclosure for presentation of operating results.
2014 Third Quarter Results Page 10

OTHER ACTIVITIES AND INFORMATION
CLH announces a new cement plant in Colombia
CLH announced it will begin the construction of a cement plant in Colombia. The total investment is expected to reach approximately US$340 million and to increase CLH’s cement production capacity in Colombia from 4.5 to close to 5.5 million tons per year.
The first phase of this project includes the construction of a new grinding mill that is expected to start cement production during the second quarter of 2015. The rest of the plant should be completed during the second half of 2016. The plant will operate using modern and efficient technology to comply with high quality and environmental standards.
This facility will be strategically located in the Antioquia department. This region has enjoyed high levels of economic growth and is expected to further benefit from the construction of infrastructure projects under the highway concession program in Colombia.
Carlos Jacks, CEO of CLH, said: “This plant will strengthen our position in Colombia, allowing us to capitalize on the increasing levels of construction activity. We will be closer to our customers tailoring our unique portfolio of innovative building solutions to suit their evolving needs.”
“The complete project will be financed with our free cash flow. It is expected to generate approximately 1,000 direct jobs during the construction phase and about 300 jobs once the operations begin, reiterating our commitment to promote the development of our communities.”
Neighboring communities will also benefit from CLH’s social initiatives and inclusive businesses like Bloqueras Solidarias and Patrimonio Hoy, community training and education programs, team-sports facilities, among others.
With this project CLH continues its expansion in Colombia. In 2013, CLH started operations in a new cement grinding plant in the Caribbean coast in Colombia, with an investment of about US$50 million. Since 2010, the number of ready-mix plants in CLH’s operations in Colombia has more than doubled, with a significant increase in the ready-mix and cement fleet.
2014 Third Quarter Results Page11

DEFINITIONS OF TERMS AND DISCLOSURES
Methodology for translation and presentation of results
Under IFRS, CLH reports its consolidated results in its functional currency, which is the US Dollar, by translating the financial statements of foreign subsidiaries using the corresponding exchange rate at the reporting date for the balance sheet and the corresponding exchange rates at the end of each month for the income statement.
For the reader’s convenience, Colombian peso amounts for the consolidated entity are calculated by converting the US dollar amounts using the closing COP/US$ exchange rate at the reporting date for balance sheet purposes, and the average COP/US$ exchange rate for the corresponding period for income statement purposes. The exchange rates used to convert: (i) the balance sheet as of September 30, 2014 and September 30, 2013 was $2,028.48 and $1,914.65 Colombian pesos per US dollar, respectively, and (ii) the consolidated results for the third quarter of 2014 and for the third quarter of 2013 were $1,939.84 and $1,913.47 Colombian pesos per US dollar, respectively.
Per-country/region selected financial information of the income statement is presented before corporate charges and royalties which are included under “other and intercompany eliminations.”
Consolidated financial information
When reference is made to consolidated financial information means the financial information of CLH together with its consolidated subsidiaries.
Presentation of financial and operating information
Individual information is provided for Colombia, Panama and Costa Rica.
Countries in Rest of CLH include Nicaragua, Guatemala, El Salvador and Brazil.
Exchange rates January – September January – September Third quarter
2014 2013 2014 2013 2014 2013
Closing Closing Average Average Average Average
Colombian peso 2,028.48 1,914.65 1,951.66 1,867.95 1,939.84 1,913.47
Panama balboa 1.00 1.00 1.00 1.00 1.00 1.00
Costa Rica colon 545.52 505.57 547.36 505.75 544.93 506.68
Euro 0.7917 0.7393 0.7421 0.7582 0.7655 0.7495
Amounts provided in units of local currency per US dollar.
2014 Third Quarter Results Page 12

DEFINITIONS OF TERMS AND DISCLOSURES
Definition of terms
Free cash flow equals operating EBITDA minus net interest expense, maintenance and strategic capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation).
Maintenance capital expenditures investments incurred for the purpose of ensuring CLH’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or internal policies.
Net debt equals total debt minus cash and cash equivalents.
Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization.
pp equals percentage points.
Strategic capital expenditures investments incurred with the purpose of increasing CLH’s profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs.
Working capital equals operating accounts receivable (including other current assets received as payment in kind) plus historical inventories minus operating payables.
2014 Third Quarter Results Page 13